Oil prices continued to climb on Thursday with no sign of easing, as markets priced in a prolonged supply squeeze from the Middle East following stalled negotiations and firm signals from Donald Trump that the blockade on Iran will remain in place.
Brent crude for June contract rose above psychological $125 a barrel in early trade, extending gains after a more than 6% surge in the previous session. US West Texas Intermediate (WTI) crude was hovering around $109 a barrel.
The sustained rally reflects growing expectations that supply from the region will remain constrained for longer, as diplomatic efforts to end the US-Israeli war involving Iran remain deadlocked. Trump’s indication that the blockade will continue, with no breakthrough in talks, has reinforced concerns that flows will stay disrupted.
Analysts say the lack of progress in negotiations has shifted market sentiment firmly towards a tighter supply outlook, supporting prices in the near term.
Separately, Goldman Sachs said the United Arab Emirates’ planned exit from OPEC may pose a greater upside risk to supply over the medium term, although current constraints linked to the conflict continue to limit output.
The bank noted that restricted access through the Strait of Hormuz is curbing production, but the UAE could eventually raise output once export routes reopen. It estimates UAE production could recover to around 3.8 million barrels per day by October 2026, with longer-term capacity potentially exceeding 4.5 million bpd.
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